More Politics Than Substance: Three Years Of Russian And Chinese Economic Cooperation In Central Asia – Analysis

(FPRI) — Over three years ago, in May 2015, Chinese President Xi Jinping and Russian President Vladimir Putin declared that they would co-develop their Eurasian integration projects, the Russian-led Eurasian Economic Union (EAEU) and the China-led Silk Road Economic Belt (SREB), now repackaged as the Belt and Road Initiative (BRI). In press statements, President Putin noted that the two sides “seek ultimately to reach a new level of partnership that will create a common economic space across the entire Eurasian continent,” while President Xi emphasized that they “will work towards greater mutual openness, coordinate our development strategies and deepen and interweave our interests for the good of both countries and peoples.” Thus, judging by the official rhetoric, we were witnessing the dawn of a new era of the “integration of integrations.” To a more skeptical observer, these statements seemed to indicate only that Moscow and Beijing had found a way to accommodate their interests in Eurasia, not that cooperation would lead to much in terms of substance.

Quick Linkages with China

Encouraged by this development, Central Asian states embarked on formalizing their own agreements with China, linking national development strategies to the BRI. Kazakhstan, a founding member of the EAEU, pioneered the trend. In December 2015, the Kazakh and Chinese prime ministers announced that their countries would develop a plan for linking the then-SREB and Kazakhstan’s “Nurly Zhol” economic development plan. The core of the policy, launched by President Nursultan Nazarbayev in 2014, was to build domestic infrastructure. It featured three priorities: transport infrastructure, energy, and manufacturing. While transport and energy infrastructure had been core to Kazakhstan-China cooperation, the joint development of the manufacturing sector is a recent trend. The Chinese and Kazakh governments quickly assembled the plan, which came into effect in August 2016. They also developed a special program to transfer industrial capacity from China to Kazakhstan that initially included 51 projects worth around $26-27 billion, ranging from the chemical industry and transportation infrastructure to agribusiness and information technology. In September 2018, a new agreement was reached on the joint implementation of 11 projects worth $1.9 billion.

Kyrgyzstan, another Central Asian state that is a member of the EAEU, officially supported the linkage between the EAEU and the BRI and started thinking of ways to benefit from it. In May 2017, then-President Almazbek Atambayev expressed his country’s interest in becoming a link in the Digital Silk Road to connect Europe and Asia and connecting it to the country’s National Program of Digital Transformation, “Taza Koom.” New President Sooranbai Zheenbekov, who took office in 2017, has shown more interest in working with China in the field of “green tech” and proposed to create in Kyrgyzstan a Chinese electric car plant targeting Central Asia and Eurasian Economic Union as the main markets.

Non-EAEU member-states Tajikistan and Uzbekistan have proposed their own plans to cooperate with China’s BRI as well. The main goals of the “National Development Strategy of the Republic of Tajikistan till 2030” (adopted in 2016), such as energy security, becoming a transit country, and food security, fully align with already well-developed areas of China-Tajikistan cooperation. Under President Shavkat Mirziyoyev, Uzbekistan is also eager to align its “Strategy of actions in five priority directions of development of Uzbekistan for 2017-21.” In a joint statement made by President Xi and President Mirziyoyev in May 2017, the two sides promised to strengthen cooperation in the context of BRI in trade, investment, finance, transport and communication, agriculture, industrial parks, and others. Reportedly, during President Mirziyoyev’s visit to Beijing, China and Uzbekistan signed dozens of deals worth $23 billion, including a $1.2 billion project on the production of synthetic liquid fuel at the country’s largest gas refinery complex Shurtan and a $3 billion deal on the development of the hydropower sector and modernization of water pumping stations.

Slow Developments between EAEU and BRI

In the meantime, in contrast to the fast pace of alignment of strategies between China and Central Asian states, the linking of the EAEU and BRI has been proceeding slowly with no substantive results yet. In March 2017, the Eurasian Economic Commission prepared a list of 39 priority projects to support the linkage, including building new roads, modernizing existing ones, creating logistics centers, and developing transport hubs. The list is not available to the public, but according to public officials, the Western Europe-Western China motorway, Moscow-Kazan high-speed railway, and China-Kyrgyzstan-Uzbekistan railway are among these projects.

The construction of the Western Europe-Western China motorway, which is supposed to stretch from the Yellow Sea to the Baltic Sea and connect China, Kazakhstan, and Russia, started in 2009. The sections in China and Kazakhstan have been completed already. The section in Russia is taking time. Its likelihood of being built increased after Putin included it on a list of priority projects in May 2018. Other projects are even further away from completion. The Moscow-Kazan high-speed railway and China-Kyrgyzstan-Uzbekistan projects are at the stage of difficult negotiations and lack of clarity on financing and feasibility. It is also not clear what role the Eurasian Economic Commission can play in their implementation.

In May 2018, EAEU member-states signed an agreement on trade and economic cooperation with China. It reaffirms the World Trade Organization (WTO) commitments by the states and establishes procedures for more transparency with regard to each other’s trade regulation measures and policies (tariffs, technical regulations, phytosanitary norms, assessment procedures, etc.). The agreement does not introduce any preferential trade arrangements (i.e., lower tariffs). It specifies that any WTO agreements and bilateral agreements between EAEU member-states and China that provide a more favorable regime than in the agreement have priority. This agreement would allow member-states to pursue their own arrangements with China. In fact, Kazakhstan has been already actively working with China on coordination of technical regulations and phytosanitary norms.

Such shallow progress in linking the EAEU and BRI indicates that its function is mostly rhetorical, signaling the intention of Russia and China to accommodate each other’s ambitions in Central Asia. Russia, lacking resources and with limited geostrategic options due to its quarrels with the West, finds itself in a particularly difficult situation. Moscow does not seem to be convinced of the benefits of linking its weakened project, the Eurasian Economic Union, with China’s powerful march to Eurasia. Perhaps revealingly, the Russian word used for “linking” in the documents, sopryazhenie, has the same root as the verb “to hitch,” bringing to mind the famous lines from Alexander Pushkin’s poem “Poltava”: “You cannot hitch a trembling doe and a horse up to a single carriage.”[1] Russia, in other words, realizes that the BRI and EAEU are very different animals. The link is political rather than practical.

Geopolitical complexities in the co-existence of two different integration projects contribute to tensions inside the EAEU. Russian officials continuously warn other EAEU member-states that they should be more cautious with China and that they would be better off negotiating with China in the framework of the EAEU—which Russia dominates. But this advice largely falls on disinterested ears. China’s financial clout and infrastructure-building capacity are irresistible for investment-hungry Central Asian states. They have to be mindful of Russia’s sensitivities, but Moscow cannot offer them much in terms of modernization. These tensions are unlikely to amount to an open conflict since all the actors try to tread softly. The “horse” of the BRI will continue to push connectivity across the Eurasian landmass, and Central Asian states will hope for the best while pursuing co-development with their giant eastern neighbor.

About the author: *Nargis Kassenova is a Senior Fellow at the Davis Center for Russian and Eurasian Studies, Harvard University. Kassenova is an Associate Professor at the Department of International Relations and Regional Studies of KIMEP University based in Almaty (Kazakhstan).

Published by the Foreign Policy Research Institute

Founded in 1955, FPRI (http://www.fpri.org/) is a 501(c)(3) non-profit organization devoted to bringing the insights of scholarship to bear on the development of policies that advance U.S. national interests and seeks to add perspective to events by fitting them into the larger historical and cultural context of international politics.

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